TSMC Rejects US Dominance: Boldly Returns Subsidies Amid Forced Equity Demands

CNBC AI News, August 22nd – The U.S. CHIPS Act, designed to incentivize semiconductor manufacturing within the nation, has lured global giants like TSMC and Samsung with the promise of hefty subsidies. However, accessing these funds may not be as straightforward as initially perceived.

The U.S. government is exploring a potentially game-changing policy shift: converting outright subsidies into equity stakes in these chip manufacturing companies. Intel is reportedly the first target, with Commerce Secretary Gina Raimondo recently confirming discussions about the U.S. potentially acquiring up to a 10% stake in the company.

Raimondo also indicated that the government is considering a similar approach with TSMC and Samsung.

While still not finalized, this policy shift reflects a nuanced approach. Officials have suggested that substantial investments by foreign firms in U.S. operations might negate the need for equity stakes. However, a lack of commitment to significant investment could trigger the subsidy-for-equity model.

Currently, the U.S. isn’t actively seeking equity in TSMC or Samsung, according to sources familiar with the matter.

This unprecedented proposition from the U.S. has understandably encountered resistance from overseas semiconductor manufacturers. TSMC, already playfully dubbed “American Semiconductor Manufacturing Company” (“美积电”) due to its substantial investments in the U.S., is unlikely to embrace a forced equity arrangement.

Sources suggest TSMC’s potential response to an equity demand is direct: return the subsidies, foregoing the funds altogether.

TSMC has pledged to invest a massive $165 billion in U.S. facilities. However, the CHIPS Act offers a relatively modest $6.6 billion in subsidies. As the world’s most profitable dedicated semiconductor foundry, TSMC may view the subsidies as less critical to its investment plans.